Mental retardation is the most common phenotypic abnormality seen in Down syndrome patients, yet the underlying mechanism remains mysterious. DSCR1, located on chromosome 21, is overexpressed in the brain of Down syndrome fetus and encodes an inhibitor of calcineurin, but its physiological significance is unknown. To study its functional importance, we generated Drosophila loss-of-function and overexpression mutants of nebula, an ortholog of human DSCR1. We found that nebula loss-of-function mutants exhibit defective learning and long-term memory that are accompanied by perturbations in calcineurin mediated-signaling. Transgenic flies overexpressing nebula also show severely impaired learning. Intriguingly, transient overexpression of nebula in adult flies is sufficient to cause defective learning, whereas restricted overexpression during development does not alter learning in adult flies. In addition, we showed that the same calcineurin-mediated signaling pathway is altered in human trisomy 21 fetal brain tissue overexpressing DSCR1. Together, these results suggest that DSCR1 mediates learning and long-term memory, and that alteration of DSCR1 expression and the subsequent disturbance in calcineurin-mediated signaling could be one cause of mental retardation in Down syndrome.